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Living the Dream

The story of Ernie Moody’s “instant” success and his prominence as a gaming investor

Living the Dream

The path to glory for many gaming startups goes through “The Hangar,” the headquarters for Action Gaming and its founder, Ernie Moody. People with ideas to advance the gaming industry knew that Moody was the go-to guy when it came to financing their dreams. Unlike other “angel” investors, Moody understands the gaming industry like no other backer could. And it is all traced back to a simple idea that launched Moody’s empire, multi-hand video poker.

“The Hangar” is an actual hangar where Moody keeps his private jet—his Four Aces Embraer Legacy Jet—at Las Vegas’ McCarran Airport, along with his collection of antique cars, courtesy of his groundbreaking invention and then his dynamic business model and knowledge of the gaming industry. Moody was recently named to the EKG Slot Awards Hall of Fame, after being inducted into the American Gaming Association’s Gaming Hall of Fame in 2019.

But it all began in Rocky Mountain high.

When gaming was legalized in Colorado for three small towns, Moody was a stockbroker in Denver. His interest piqued, he and several others quit their jobs and invested in a small hotel, the Gilpin, in Black Hawk and began to delve into the gaming industry.

Part of Moody’s learning process was to attend the big gaming trade shows in Las Vegas. He was fascinated by new innovations, particularly table games.

“I became very interested in how the slot machines and the table games were functioning, and what made a game attractive, what made players want to play it, that kind of thing. I met at one of the shows the founder of Shuffle Master, John Breeding. John was sitting at a little table, about the size of a coffee table, in a small booth. He had his shuffler on it, and I asked him how he was going to sell them. He told me he wasn’t going to sell them; he was planning on leasing them to gambling companies and casinos all over the world. And I thought, ‘Well, good luck with that.’”

Two years later, Breeding was much more successful.

“John had this huge booth at the show that year,” he says. “He had all these dealers dealing blackjack and all kinds of games. The shufflers were going out all over the world. And he had a little game called Let It Ride.”

But in another two years, Let It Ride was doing $25 million a year for Breeding. Moody had a revelation. He didn’t set his sights too high. Moody only wanted a small piece of the market that it had achieved. He’d be happy with 10 percent.

But table games were tougher than they looked. When Moody realized the table game market did not offer enough of a reward for all the work put into it, he turned his attention to the slot games.

“If I could just come up with a new kind of video poker game, I’d have something,” he says. “I knew there were about 150,000 video poker machines out there at the time.” Again, he thought 10 percent would be a home run.

When he got back to Colorado that winter, he spent time with several decks of cards and became fixated with dealing three rows of cards, trying to combine them, switch them, until one day he figured it out.

“It was like a lightbulb went on in my head,” he says. “If I just put two rows face down and one row face up, and whatever the player liked in the face-up cards, if he held the three kings, now he’s got three kings in all three hands.”

It was so simple, it was astounding. If you had a good hand, you could make it better in the other two rows. If you had nothing, you could get something in the other two rows.

Anthony Curtis, the publisher of the Las Vegas Advisor and owner of Huntington Press, says it was a “game changer.” A book published by Huntington Press on table-game design credits Moody with impacting that sector, as well as video poker. In his book The Essentials of Casino Game Design, Dan Lubin writes: “I have to assume that at least some readers have aspirations of creating the next great machine game, which is likely due in no small part to the exploits of one Ernie Moody.

“Of the many catalysts that have launched hopefuls down the road of game design, the most prominent is surely the story of the former stockbroker who quit his job and developed Triple Play video poker. While the numbers vary according to who is quoting them, it’s safe to say that, at their zenith, Moody was raking in multiple millions per month in royalties for his multi-line video poker products (a 2003 article in Cigar Aficionado speculated it was “as much as $15 million”). Ernie has a 500-plus-acre ranch with a horse racing/training track outside of San Diego and an office with a Gulfstream jet parked inside that borders a runway at McCarran International Airport in Las Vegas.

“Yep, a whole lot of prospective game designers are in it for a shot at Moody-esque success and, accordingly, many assume that slots or video poker is where the opportunities lie,” Lubin writes.


IGT Connection

Moody, who had a relationship with IGT in the mid ’90s, immediately thought they would like his idea for a new game. At a Colorado golf tournament that spring, he arranged to be paired with Bob Bittman, the man responsible for game development. IGT had just finished a huge factory in Reno to build machines and Moody figured Bittman would be interested. But he decided to pitch Triple Play Poker only, none of his other games.

But Moody added a twist that had never been done before.

“I wanted to charge a $5 fee per day per machine,” he says. “Bittman thought I was crazy but told me to give it a shot.”

Moody went to Sunset Station casino in Las Vegas, one of the hotbeds of video poker, and pitched the idea. They were interested and took a few as a test.

“They had regular games on one side of a slot bank, and my games, Triple Play Poker, were on the other side,” he says. “On my side, every game was being played, and there were people standing in line waiting to play the games. The other side was almost empty.”

Station quickly bought 36 games, which gave Moody the sales pitch he needed.

“I’d go to other casinos and tell them Station took 36 games; how many do you want?”

Back home in Colorado, Moody and his girlfriend Mercedes—still with him today—set up a whiteboard to track each machine, where they were and how they were performing.

“I knew we were going to do really well when we had to buy a second whiteboard to keep track of where the games were going,” he says. “And then about three months later, the games’ trajectory went parabolic, to the point where we couldn’t keep track of where all the games were.”

That was enough proof for Bittman. He changed the deal so that IGT would handle all the sales, billing and service, and agreed to boost the royalty fee to $15 per game per day.

Outside of Bittman, Moody said he was very close to IGT Chairman Chuck Mathewson.

“Chuck became a real great friend of mine,” he says, “kind of like my mentor.”

But changes in IGT management later on made Moody a mystery man at the company.

“Every time a new management team would come in, one of the first questions they would ask is, ‘Why are we writing this enormous check each month to this Ernie Moody guy?’”

One of the reasons why is that Moody solidified IGT as the market leader by far in the video poker field. Competitors over the years had nipped at the heels of offering the video poker game invented by IGT founder Si Redd, with varying degrees of success. But with the addition of Triple Play Poker, school was out—IGT was the bona fide king of the hill, selling thousands of machines to hundreds of casinos.

Ironically, Moody says Redd might never have relinquished control of video poker.

“If Si Redd had applied for a patent on video poker, where you’re playing against a pay table instead of other players, he very well could have gotten that patent,” says Moody. “And he would have been in control of that whole market from day one.”

The rest, as they say, is history. Triple Play Poker became one of the monster games in the history of the industry with as many as 20,000 machines on casino floors at any time. When the Triple Play patent expired in 2015, Moody had already formulated other plans to replace the royalty fees he was collecting on Triple Play.

While Triple Play and other IGT multiple-hand video poker games are available online, there isn’t much excitement about iGaming at, according to Mike Fields, executive vice president of Moody’s Action Gaming with the same position for Action’s, a popular instructional site for video poker. He says he’s turned down seven-figure offers for the URL.

“Our plan was to truly make it an educational site,” says Fields, “a community for players to play for free, as well as operators, because it’s a much better selling tool to be able to play a game rather than read a brochure. We didn’t want to get licensed to get involved in online gaming, and we certainly didn’t want to be any competition for IGT online. The natural thing for us to do was to use it as a marketing tool. We haven’t monetized it as much as we could, but that was never the plan.”

Moody understands the appeal of online gaming, but he’s more concerned about the bricks-and-mortar casinos and how they’ll survive if the millennials aren’t interested in gambling.

“How do you pull these younger people into the casinos?” he asks. “It doesn’t seem like the slot machines of today are going to do it. But that’s sort of the multimillion-dollar question at this point.”

Ironically, the “skill games” being tried in today’s casinos are far less successful than the original skill game, video poker.

“They were doing skill games before skill games were cool, and it’s still the best of all,” says Curtis. “All the different video poker games with all the different ways that you can play is the absolute best way to play. You can learn through software or just intuitively, which is what 98 percent of the people who play it do. They try to intuitively outsmart it, and it checks a lot of boxes to what makes a fun game, which is what they’re trying to accomplish.”


Be Like Ernie

With his first million-dollar royalty check, Moody went out and bought his first new car—a red Volkswagen Beetle.

“It was what he always wanted,” says Fields, “so that’s what he got!”

Moody has gotten a lot of toys with his earnings from Triple Play Poker and its successors, but it’s his largesse with his money to support new ideas and innovations in gaming that has brought him the most respect.

Fields explains how and why Moody decided to invest rather that save.

“We file for patents on everything we create,” he says. “Patents typically run for 20 years. And so the relationship with IGT has an evergreen nature to it. When Ultimate X comes along, it has an impact and rests on top of the old patents. So even though the underlying Triple Play patents have expired, all the Ultimate X patents are good until 2027 or 2031. And as long as we keep coming up with games we get patents for, we keep creating revenue streams for IGT and Action Gaming.”

But those patents still wouldn’t replace completely the revenue stream of Triple Play.

“Somewhere around 2010,” Fields says, “we recognized that when the patents expired the arrangements with IGT would have to change and we would experience a revenue decline of some sort. Ernie thought it would be great if we could sort of give back and help out folks in the industry. So we started looking at different gaming industry deals and investing in various companies and people, so if our patent fees would drop, we would make up the revenue difference by having investments in successful gaming companies. It was something of a replacement strategy.”

Curtis says it was Moody’s success that often inspired others to take that step.

“Ernie Moody was the guy who put the dream in everybody’s head because of what he was able to do,” says Curtis.

So to be able to be a catalyst for others to succeed was part of the impetus for Moody’s investments.

Not every investment worked out. Moody says his investments have two characteristics, generally.

“Some of them have been spectacular failures,” he says. “The sad thing is, the bad ones blow up first, and for the good ones, it’s like feeding little birds. You just have to keep feeding them, or they’re going to die.”

One of the failures was a creative idea from Jeff Jordan, a former MGM and IGT slot executive. Jordan’s idea for a website that would consolidate a player’s membership in various slot clubs was innovative but didn’t achieve commercial success. The economics of consumer acquisition and the controversial nature of the offering ultimately limited the opportunity.

“Ernie and his team were supportive and easy to work with,” says Jordan. “Ernie was willing to take risks and support your vision. However, he did hold the line if the idea was not getting traction, which is helpful when you are so close to an idea.

“Ernie allowed me to be an entrepreneur during a difficult economic time. I will always be grateful for his support.

“While they wanted a good business plan, they gave you the freedom to conduct business the way you believed it would work. That’s different than other investors who may get more aggressive if things aren’t working out immediately.”

While Jordan says he gave it all and Moody went the extra mile to help, the failure hurts more because he let Moody down rather than because it didn’t work.

“I still feel a little guilty that I lost his money,” says Jordan.

Former IGT executive Ali Saffari came to Moody with several ideas, which they patented. Moody admits it was a wild ride, and Leap Forward Gaming was eventually sold to IGT.

An investment in Walker Digital Table Games, a groundbreaking innovation to track chips, cards and players at table games, has been frustrating because of regulatory issues and expenses. But this is one of the birds that Moody keeps feeding because the business fundamentals are solid.

One of Moody’s very successful investments was GeoComply, the geolocation service that has become the dominant player in the iGaming market in the U.S. and around the world. Anna Sainsbury, GeoComply’s chairwoman, says Moody’s participation was crucial to the success of the company.

“Ernie really took a bet on us when nobody else could see the value,” she says. “He liked the idea of what we could do not just for gaming but also for the emerging streaming and digital payments industries.

“I would say that working with Ernie has been a pleasure, but the truth is that we almost never talk about work. It is always about something much more interesting instead, such as the exact constituents of the best gin and tonic or who does the best breakfast in Vegas. His brain is fantastic, and he has the driest and most wicked sense of humor. He is a lovely man and we consider ourselves lucky to have had the chance to repay the confidence he showed in us at an early stage of our evolution.”


Giving Back

Action Gaming’s Mike Fields and Hall of Fame inductee Ernie Moody

Fields says Moody’s talents extend beyond just recognizing great ideas and putting the money up.

“Ernie has a collection of pretty remarkable gifts,” he says. “One of the things that he does really well is he doesn’t get locked in by our limitations because the industry says there’s limitations with the creation of a Triple Play, the creation of a new financial model. He’s also inspired creativity. Everybody wants to have the next licensed game and become the next Ernie Moody.

“He created a different economic model and took a very staid product, video poker, and breathed new life into it. He was able to put a bunch of these new things on, have it make three to four times the house average and drive play into the casinos. Remember, video poker players visit casinos more frequently than slot players. So he created compelling games with a new financial philosophy that didn’t exist before. He created financial models that didn’t exist before. Mostly, what he did is he just made a ton of money for IGT and for the casino business.”

Curtis says Moody has one particular characteristic that makes him great.

“Ernie’s got a real interesting quality that I see, which is, he stays in his lane. Ernie is very comfortable with his core competencies, and when he is within that realm of core competency, he’s operating at a high level. We’re all guilty of trying to venture out into things that we’re not good at. We’re so sure that if we’re good at one thing, then we’re going to be great at another. It’s naturally progressive and that’s not necessarily so, and I think Ernie has always said this is what I’m good at, and he sticks to it.”

But it takes a team, and Moody, with his typical modesty, credits Fields for helping to make what it is today. He also gives a great deal of credit to his “math guy,” Yoohwan Hwang.

“We took over a year to develop Ultimate X (Action Gaming’s newest hit game),” says Moody. “Yoohwan designed an elegant math for the game that created a very elegant game. It took a while, but when it was finalized, we had a winner.”

In addition to funding some of the industry’s most innovative initiatives, Moody is generous with charities. Again, with characteristic humility, he simply says, “When people come to us asking for money, we give what we can.”

Moody is a major contributor to Larry Ruvo’s Keeping the Memory Alive organization that funds research into Alzheimer’s and dementia. The foundation funded the Cleveland Clinic Lou Ruvo Center for Brain Health in Downtown Las Vegas, a remarkable building designed by the famous architect Frank Gehry. And Moody again credits someone else.

“We were looking for a special architect for the center, and Larry found Frank Gehry. Frank Gehry said, ‘There’s no way I’m gonna do anything in Vegas.’ But guess what? We got a beautiful Frank Geary building in Vegas because of Larry Ruvo.”

Some of Moody’s other major contributions go to Opportunity Village in Las Vegas, the Make-a-Wish Foundation and even Navy Seals.

“We try to support many local charities,” he says.

But it’s his humanity that draws people to him. Curtis recalls meeting with Moody at a legendary “dive” casino in Las Vegas.

“I remember setting up a meeting with him and Mike (Fields) at the Thunderbird bar, which we chose because I told them they had a great hamburger,” he laughs. “So there we are sitting at the old T-Bird—which really did have great hamburgers—and we’re looking at the video poker machine and we’re discussing promotions that they’re doing on the machine. It’s just like three dudes hanging out in a bar. It’s pretty cool.”

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.